Port bidders, businesses and local officials to address privatization at public hearing

NORFOLK — — Port privatization advocates were a distinct minority at a Thursday public hearing during which Virginia Port Authority board members sought input from maritime companies and individuals about a proposal that would change the operating structure at state terminals.

Local business executives packed the Nauticus theater in downtown Norfolk airing concerns about potential privatization at the Port of Virginia, while also speaking out in support of the current state-formed, nonprofit operator, Virginia International Terminals.

A handful of individuals, including a free market political activist, told VPA commissioners Virginia would be better off if its ports were run by APM Terminals — a global terminal operator and business unit of A.P. Moller Maersk that is bidding to run port facilities in Newport News, Norfolk and Portsmouth for the next 48 years.

But shipping lines, truckers, and customs brokers said APM's relationship with other A.P. Moller subsidiaries, including Maersk Line, could place them at a competitive disadvantage.

They, along with several VIT executives, argued Virginia's current nonprofit model for running the ports best serves the maritime industry and the state moving forward.

"VIT's primary duty is to the citizens," said VIT's chief operating officer Joe Ruddy near the beginning of the hearing. "A private terminal operator's primary duty is to its shareholders."

Ruddy said the value to the state of sticking with VIT over a 48-year period is $13 billion or $3.7 billion in today's dollars.

That compares to an estimated $3.1 billion to $3.9 billion that APM says its deal is worth to the state.

Two other port bidders, RREEF Infrastructure and the Carlyle Group, didn't make presentations at the hearing, and were barely mentioned by any of the more than 40 speakers.

Bill Jackson of RJR Elite Trucking said that if APM takes over operations at Hampton Roads terminals, it will turn a profit at his and other port customers' expense.

Jackson also praised VIT for its efficiency, offering a starkly different assessment than Gov. Bob McDonnell, who in late August said the ports needed more efficient management.

"I'm a trucker," Jackson said. "I've been in every terminal in the eastern half of the U.S., and I can tell you a little bit about who's efficient and who ain't. VIT is efficient."

VIT CEO Joe Dorto was singled out for praise by several speakers, and his short speech drew the sole standing ovation of the afternoon.

Calling the port "a model of efficiency" and the "envy of the industry," Dorto said VIT's employees would continue to do "the best job they can to make this port the most efficient and successful port in the U.S."

"Gov. McDonnell says the port can do better," Ericson said, and "privatizing with APM will steer the port in the right direction."

Erickson later in an interview described himself as an advocate of limited government.

"We can do better in business when there's private industry involved," he said. "The best case is free-market capitalism, but you can't really get there from here."

Ericskon calledd it unfortunate that pro-APM speakers were outnumbered at the event, "but you're not going to get 100 activists to come out here, especially during campaign season."

Instead representatives for companies and trade associations made the case that privatization would be bad for business.

Roger Giesinger, president of the Hampton Roads Shipping Association, said APM's proposal could lead to job losses for dockworkers and VIT and VPA employees, and he warned that the company's profit motive could cost the ports certain types of cargo.

While container fees generate those kinds of margins, Giesinger warned that break-bulk cargo and car ship handling are lower-profit activities that might not be attractive to APM. (Newport News Marine Terminal specializes in handling break-bulk cargo, items that are too bulky to fit in containers, and roll-on/roll-off car ships.)

John Crowley, APM's vice president for legal and regulatory affairs, dismissed concerns that Hampton Roads under the company would become purely a container port.

As terminal operator, APM would handle the types of cargo that the port authority officials specify, he said.

Today APM handles break-bulk cargo at other ports, Crowley said, and he said the company envisions increasing break-bulk volumes In Virginia.

A path for port expansion

APM's top American official, Eric Sisco, in a short presentation, said the company's bid provides the best way to expand and out-compete East Coast rivals.